FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities and Exchange Act of 1934
For the quarterly period ended: 12/31/97 Commission file number: 0-22818
THE HAIN FOOD GROUP, INC.
(Exact name of Registrant as specified in its charter)
Delaware 22-3240619
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
50 Charles Lindbergh Boulevard, Uniondale, New York 11553
(Address of principal executive offices)
Registrant's telephone number, including area code: (516) 237-6200
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports and (2) has been subject to
such filing Requirement for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date.
11,469,899 shares of Common Stock $.01 par value, as of February 12, 1998.
<PAGE>
THE HAIN FOOD GROUP, INC.
INDEX
Part I Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets - December 31, 1997
(unaudited) and June 30, 1997
Consolidated Statements of Income - Three months and
six months ended December 31, 1997 and 1996 (unaudited)
Consolidated Statements of Cash Flows - Six months
ended December 31, 1997 and 1996 (unaudited)
Consolidated Statement of Stockholders' Equity - Six
months ended December 31, 1997 (unaudited)
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Part II Other Information
Items 1 - 3 are not applicable
Item 4 - Submission of Matters to a Vote of Security Holders
Item 5 - Other Information
Item 6 - Exhibits and Reports on Form 8-K
Signatures
<PAGE>
<TABLE>
PART I - ITEM 1. - FINANCIAL INFORMATION
THE HAIN FOOD GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
December 31 June 30
1997 1997
(Unaudited) (Note)
--------- --------
<C> <C>
ASSETS
Current assets:
Cash $426,000 $219,000
Trade accounts receivable - net 11,475,000 8,447,000
Inventories 14,678,000 6,635,000
Receivables from sale of
equipment - current portion 249,000 408,000
Other current assets 1,569,000 818,000
---------- ----------
Total current assets 28,397,000 16,527,000
Property and equipment, net
of accumulated depreciation 828,000 743,000
Receivables from sale of
equipment - non-current portion 100,000 150,000
Goodwill and other intangible assets,
net of accumulated amortization of
$2,609,000 and $2,074,000 52,207,000 29,188,000
Deferred financing costs, net of
accumulated amortization
of $1,230,000 and $1,049,000 2,262,000 975,000
Other assets 1,494,000 1,312,000
---------- ----------
Total assets $85,288,000 $48,895,000
========== ==========
<FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current liabilities:
Accounts payable and accrued expenses $12,663,000 $7,568,000
Current portion of long-term debt 3,147,000 4,178,000
Income taxes payable 783,000 299,000
---------- ----------
Total current liabilities 16,593,000 12,045,000
Long-term debt, less current portion 16,772,000 10,756,000
Other liabilities 1,510,000 483,000
Deferred income taxes 552,000 552,000
---------- ----------
Total liabilities 35,427,000 23,836,000
---------- ----------
Stockholders' equity:
Preferred stock - $.01 par value;
authorized 5,000,000 shares,
no shares issued
Common stock - $.01 par value,
authorized 40,000,000 shares,
issued 11,486,899 and 8,881,899 shares 115,000 89,000
Additional paid-in capital 43,493,000 20,804,000
Retained earnings 6,528,000 4,991,000
---------- ----------
Total stockholders' equity 50,136,000 25,884,000
Less: 100,000 and 300,000 shares
of treasury stock, at 275,000 825,000
---------- ----------
49,861,000 25,059,000
---------- ----------
Total liabilities and
stockholders' equity $85,288,000 $48,895,000
========== ==========
<FN>
Note - The balance sheet at June 30, 1997 has been derived from
the audited financial statements at that date.
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
THE HAIN FOOD GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
<CAPTION>
Three Months Ended Six Months Ended
December 31 December 31
1997 1996 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net sales $28,676,000 $17,117,000 $45,012,000 $32,554,000
Cost of sales 17,050,000 10,539,000 26,912,000 20,247,000
---------- ---------- ---------- ----------
Gross profit 11,626,000 6,578,000 18,100,000 12,307,000
---------- --------- ---------- ----------
Selling, general
and administrative
expenses 8,488,000 5,103,000 13,325,000 9,436,000
Depreciation of
property and
equipment 66,000 42,000 114,000 83,000
Amortization of
goodwill and other
intangible assets 325,000 187,000 535,000 372,000
--------- --------- ---------- ---------
8,879,000 5,332,000 13,974,000 9,891,000
--------- --------- ---------- ---------
Operating income 2,747,000 1,246,000 4,126,000 2,416,000
--------- --------- --------- ---------
Interest expense-net 759,000 367,000 1,179,000 825,000
Amortization of
deferred financing
costs 143,000 127,000 274,000 250,000
------- ------- --------- ---------
902,000 494,000 1,453,000 1,075,000
--------- ------- --------- ---------
Income before income
taxes 1,845,000 752,000 2,673,000 1,341,000
Provision for income
taxes 784,000 324,000 1,136,000 577,000
--------- ------- --------- --------
Net income $1,061,000 $428,000 $1,537,000 $764,000
========= ======= ========= =======
Net income per
common share:
Diluted $0.10 $0.05 $0.15 $0.09
==== ==== ==== ====
Basic $0.11 $0.05 $0.17 $0.09
==== ==== ==== ====
Common equivalent
shares:
Diluted 10,925,000 8,831,000 10,445,000 8,885,000
========== ========= ========== =========
Basic 9,454,000 8,760,000 9,051,000 8,814,000
========= ========= ========= =========
<FN>
</TABLE>
See notes to condensed consolidated financial statements.
<PAGE>
<TABLE>
THE HAIN FOOD GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Six Months Ended
December 31
1997 1996
-------- -------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $1,537,000 $764,000
Adjustments to reconcile net income
to net cash (used in) provided by
operating activities:
Depreciation of property and equipment 114,000 83,000
Amortization of goodwill
and other intangible assets 535,000 372,000
Amortization of deferred financing costs 274,000 250,000
Provision for doubtful accounts 44,000 78,000
Increase (decrease) in cash attributable
to changes in assets and liabilities,
net of amounts applicable to acquired
businesses:
Accounts receivable (373,000) (247,000)
Inventories (3,654,000) 576,000
Other current assets (269,000) (438,000)
Other assets (182,000) (54,000)
Accounts payable and accrued expenses 577,000 (1,121,000)
Income taxes payable 484,000 (45,000)
------- ---------
Net cash (used in) provided by
operating activities (913,000) 218,000
------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of businesses (23,381,000)
Acquisition of property and equipment (91,000) (80,000)
---------- ------
Net cash used in investing activities (23,472,000) (80,000)
---------- ------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from bank revolving credit 350,000 950,000
Proceeds from senior bank term loan 30,000,000
Payment of senior bank term loan (25,342,000) (577,000)
Payment of debt of acquired company (2,103,000)
Costs in connection with bank financing (785,000)
Proceeds from public stock offering,
net of related expenses 20,865,000
Proceeds from exercise of warrants and
options, net of related expenses 1,637,000
Purchase of treasury stock (825,000)
Collections of receivables from
equipment sales 209,000 409,000
Payment of other long-term debt (116,000) (67,000)
Other - net (123,000)
---------- -------
Net cash provided by (used in)
financing activities 24,592,000 (110,000)
---------- -------
Net increase in cash 207,000 28,000
Cash at beginning of period 219,000 306,000
------- -------
Cash at end of period $426,000 $334,000
======= =======
<FN>
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
THE HAIN FOOD GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED DECEMBER 31, 1997
Common Stock Additional
Amount Paid-in Retained Treasury Stock
Shares at $.01 Capital Earnings Shares Amount Total
--------- -------- ---------- --------- ------- ------- ----------
<C> <C> <C> <C> <C> <C> <C>
Balance at June 30, 1997 8,881,899 $89,000 $20,804,000 $4,991,000 300,000 ($825,000) $25,059,000
Issuance of 2,500,000 shares
in public stock offering 2,500,000 25,000 20,840,000 20,865,000
Proceeds from exercise of
Common Stock warrants,
net of related expenses 743,000 (200,000) 550,000 1,293,000
Exercise of stock options 105,000 1,000 339,000 340,000
Value ascribed to warrants 763,000 763,000
Other 4,000 4,000
Net income for the period 1,537,000 1,537,000
---------- ------- ---------- --------- ------- -------- ----------
Balance at
December 31, 1997 11,486,899 $115,000 $43,493,000 $6,528,000 100,000 $(275,000) $49,861,000
========== ======= ========== ========= ======= ======== ==========
<FN>
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
THE HAIN FOOD GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. GENERAL:
The Company and its subsidiaries operate as one business segment: the sale
of specialty food products which are manufactured by various co-packers.
The Company's principal product lines consist of Hain Pure Foods and
Westbrae Natural (natural foods), Hollywood Foods (principally healthy
cooking oils), Estee (sugar-free, medically directed snacks), Featherweight
(low sodium food products), Kineret Foods (frozen kosher foods), Weight
Watchers (dry and refrigerated products), and Boston Popcorn (snacks).
2. BASIS OF PRESENTATION:
All amounts in the financial statements have been rounded to the nearest
thousand dollars, except shares and per share amounts.
The accompanying condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles. In the opinion of management, all adjustments (including
normal recurring accruals) considered necessary for a fair presentation
have been included. Reference is made to the footnotes to the audited
consolidated financial statements of the Company and subsidiaries as at
June 30, 1997 and for the year then ended included in the Company's
Annual Report on Form 10-K for information not included in these
condensed footnotes.
3. ACQUISITION:
On October 14, 1997, the Company completed a tender offer for all of the
shares of Westbrae Natural, Inc. ("Westbrae), a publicly-owned company,
for $3.625 per share of common stock in cash. The aggregate cash
purchase price, including acquisition costs, amounted to $23.8 million.
In addition, the Company repaid approximately $2.1 million of outstanding
Westbrae debt. To finance the acquisition, the Company entered into a
$40 million credit facility with its bank providing for a $30 million
Senior Term Loan and a $10 million revolving credit line. See Note 5 below.
<PAGE>
Westbrae (formerly known as Vestro Natural Foods, Inc.), headquartered in
Carson, California, is a leading formulator and marketer of high quality
natural and organic foods sold under the brand names Westbrae Natural,
Westsoy, Little Bear and Bearitos, encompassing 300 food items such as
non-dairy beverages, chips, snacks, beans and soups.
The above acquisition has been accounted for as a purchase and, therefore,
operating results of Westbrae have been included in the accompanying
financial statements from the date of acquisition.
Unaudited pro forma results of operations for the six months ended
December 31, 1997 and 1996, assuming that the acquisition had occurred
as of July 1, 1996 are as follows:
1997 1996
---------- ---------
Net sales $55,741,000 $47,947,000
Net income 1,177,000 920,000
Net income per share (diluted) $ .17 $ .10
The pro forma operating results shown above are not necessarily
indicative of operations in the period following acquisition.
4. INVENTORIES:
Dec. 31 June 30
1997 1997
---------- ---------
Finished goods $11,445,000 $5,418,000
Raw materials and packaging 3,233,000 1,217,000
---------- ---------
$14,678,000 $6,635,000
========== =========
5. LONG-TERM DEBT:
Long-term debt consists of the following:
Dec. 31 June 30
1997 1997
-------- ---------
Senior Term Loan $ 9,505,000 $ 4,847,000
Revolving Credit 2,600,000 2,250,000
12.5% Subordinated Debentures,
net of unamortized original
issue discount of $1,102,000
and $1,195,000 7,398,000 7,305,000
Notes payable to sellers in
connection with acquisition
of companies and other
long-term debt 416,000 532,000
---------- ---------
19,919,000 14,934,000
Current portion 3,147,000 4,178,000
---------- ----------
$16,772,000 $10,756,000
========== ==========
<PAGE>
On October 14, 1997, in connection with the acquisition of Westbrae, the
Company and its bank entered into a $40 million Amended and Restated
Credit Facility ("New Facility") providing for a $30 million senior term
loan and a $10 million revolving credit line. The New Facility replaced the
Company's existing $18 million facility with the same bank. Presently,
borrowings under the facility bear interest at rates equal to, at the
Company's option, either (i) 0.25% under the bank's base rate or (ii) 2.00%
over the Eurodollar rate. The senior term loan is repayable in quarterly
principal installments, commencing December 31, 1998 through maturity of the
New Facility on December 31, 2003. Pursuant to the revolving credit line,
the Company may borrow up to 85% of eligible trade receivables and 60% of
eligible inventories. Amounts outstanding under the New Facility are
collateralized by principally all of the Company's assets. The Company
borrowed the full $30 million senior term loan to fund the cash purchase
price and related closing costs of the acquisition and to repay certain
existing debt of the Company and Westbrae. On December 8, 1997, the Company
repaid approximately $21 million of such debt from the proceeds of a public
offering of its common stock
The New Facility contains certain financial and other restrictive
covenants which, among other matters, restrict the payment of dividends
and the incurrence of significant additional indebtedness. The Company is
also required to maintain various financial ratios, including minimum working
capital ratios, the achievement of certain earnings levels, and interest and
fixed charge coverage ratios.
See Liquidity and Capital Resources in Management's Discussion and Analysis
of Financial Condition and Results of Operations for additional information
on the aforementioned long-term debt, including interest rates, eligible
borrowings under the revolving credit facility, required payments of
principal, maturities, and restrictive covenants contained therein.
<PAGE>
6. EARNINGS PER COMMON SHARE:
In February 1997, the FASB issued Statement No. 128, "Earnings Per Share"
("FAS 128"), which is effective for both interim and annual financial
statements for periods ending after December 15, 1997. The Company is
required to change the method currently used to compute earnings per share
and restate all periods. Under the new requirements for calculating basic
earnings per share, the dilutive effect of stock options and warrants will
be excluded. The following table sets forth the computation of basic and
diluted earnings per share pursuant to FAS 128.
Three Months Ended Six Months Ended
December 31 December 31
1997 1996 1997 1996
-------- -------- --------- ---------
Numerator:
Net income for numerator
for basic and diluted
earnings per share -
income available to
common stockholders $1,061,000 $428,000 $1,537,000 $764,000
========= ======= ========= =======
Denominator:
Denominator for basic
earnings per - weighted
average shares outstanding
during the period (a) 9,454,000 8,760,000 9,051,000 8,814,000
--------- --------- --------- ---------
Effect of dilutive securities:
Employee and director stock
options 539,000 41,000 503,000 41,000
Warrants 932,000 30,000 891,000 30,000
--------- ------ --------- ------
Dilutive potential common
Shares (b) 1,471,000 71,000 1,394,000 71,000
--------- ------ --------- ------
Denominator for diluted
earnings per share -
adjusted weighted average
shares and assumed
conversions 10,925,000 8,831,000 10,445,000 8,885,000
========== ========= ========== =========
Basic earnings per share $ .11 $ .05 $ .17 $ .09
=== === === ===
Diluted earnings per share $ .10 $ .05 $ .15 $ .09
=== === === ===
(a) On December 8, 1997, the Company issued 2,500,000 shares of common
stock in connection with a public offering.
(b) The increase in the amount of dilutive potential shares in the 1997
periods was attributable in part to an increase in the market price
of the Company's common stock over the year earlier periods.
<PAGE>
7. STOCKHOLDERS' EQUITY:
In connection with the acquisition of Estee, the Company issued a warrant
to the seller to purchase 200,000 shares of the Company's common stock at
an exercise price of $6.50 per share. In August and September 1997, the
seller exercised all of the warrants and the Company issued 200,000 shares
of Common Stock out of treasury for aggregate proceeds of $1,300,000. The
proceeds were used to pay down bank debt.
In connection with the New Facility with the bank discussed above, the
Company issued a warrant to the bank to purchase 114,294 shares of the
Company's common stock at an exercise price of $12.294. The warrant
expires on December 31, 2003. The value ascribed to this warrant of
approximately $683,000 will be amortized over 6 years.
On December 8, 1997, the Company completed a secondary public offering of
2,500,000 shares of its common stock at $9 per share. Proceeds to the
Company, net of expenses of the offering, amounted to approximately
$20.9 million, which was utilized to pay down the New Facility with the
bank discussed above. In connection therewith, certain officers of the
Company exercised options for an aggregate of 105,000 shares of common stock
which were issued by the Company on December 7, 1997 and subsequently sold on
December 8, 1997. The Company received aggregate net proceeds of
approximately $340,000.
On December 9, 1997, the stockholders of the Company approved an
amendment to increase the number of shares issuable under the 1994 Long
Term Incentive and Stock Award Plan by 354,000 to 1,200,000 shares. As a
result, the Company's chief executive officer received 125,000 stock
options that had been conditionally granted to him at $4.8125 per share
on the date of grant (June 30, 1997). The Company will incur a straight
line non-cash compensation charge over the 10-year vesting period based on
the excess (approximately $461,000) of the market value of the stock
options ($8.50 per share) on December 9, 1997 compared to 4.8125 per
share on the date of grant.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
Three Months Ended December 31, 1997
On October 14, 1997, the Company acquired Westbrae Natural, Inc. ("Westbrae")
in a transaction accounted for as a purchase. Accordingly, the operating
results of Westbrae are included in the accompanying financial statements
from date of acquisition.
Sales for the current quarter increased by approximately $11.6 million as
compared to the 1996 quarter. The increase was substantially attributable to
the sales of Westbrae.
Gross margin percentage increased by 2.1% in the current quarter compared to
the 1996 quarter, principally because of improved margins obtained on several
of the Company's product lines, the effect of higher gross margins of the
Company's new Westbrae division, and a slight reduction in warehousing and
delivery costs as a percentage of sales.
Selling, general and administrative expenses, as a percentage of net sales,
decreased by .2% during the current quarter compared to the 1996 quarter
principally because of the higher absorption of general and administrative
expenses by higher sales levels.
Operating income, as a percentage of net sales, increased by 2.3% principally
because of the aforementioned increase in gross margin percentage.
Interest and financing costs in the current quarter increased by approximately
$.4 million due to the debt incurred in October 1997 in connection with the
acquisition of Westbrae. On December 8, 1997, the Company repaid approximately
$21 million of such debt from the proceeds of a public offering of its
common stock.
Income taxes, as a percentage of pre-tax income, amounted to 42.5% compared to
43.1% in the 1996 quarter. The income tax rate utilized for the current quarter
is based on the Company's estimate of the effective income tax rate for the
fiscal year ending June 30, 1998.
Net income in the current quarter increased by approximately $.6 million,
principally because of higher sales levels, improved gross margin percentage,
and a slightly lower effective income tax rate.
<PAGE>
Six Months Ended December 31, 1997
Sales for the six months increased by approximately $12.5 million as compared
to the 1996 period. Such increase was attributable to the sales of Westbrae
and increased sales of other product lines.
Gross margin percentage increased by 2.4% in the six-month period, principally
because of improved margins obtained on several of the Company's product lines,
the effect of higher gross margins of the Company's new Westbrae division in
the quarter ended December 31, 1997, and a slight reduction in warehousing and
delivery costs as a percentage of sales.
Selling, general and administrative expenses, as a percentage of net sales,
were .6% higher during the current six month period compared to the 1996
period, principally because of higher selling expenses as a percentage of
sales during the Company's first fiscal quarter.
Operating income, as a percentage of net sales, for the six-month period
increased by 1.7% principally because of the aforementioned increase in gross
margin percentage, offset by higher selling, general and administrative
expenses.
Interest and financing costs in the six-month period increased by approximately
$.4 million. See the discussion of the quarter ended December 31, 1997 for an
explanation thereof.
Income taxes, as a percentage of pre-tax income, amounted to 42.5% for the six-
month period compared to 43.0% in the 1996 period. The income tax rate
utilized on an interim basis is based on the Company's estimate of the
effective income tax rate for the fiscal year ending June 30, 1998.
Net income in the six-month period increased by approximately $.8 million,
principally because of higher sales levels, an improved gross margin percentage
offset by a slightly higher selling, general and administrative expense level,
and a slightly lower effective income tax rate.
<PAGE>
Liquidity and Capital Resources
Debt
On October 14, 1997, the Company acquired Westbrae for a cash purchase price of
approximately $23.8, million including acquisition costs. In addition, the
Company repaid approximately $2.1 million of Westbrae debt to third parties.
To finance the acquisition, the Company entered into a $40 million credit
facility ("New Facility") with its bank providing for a $30 million Senior Term
Loan and a $10 million revolving credit line. Approximately $32 million of the
New Facility was borrowed on October 14, 1997 to acquire Westbrae and repay
existing indebtedness to the bank. On December 8, 1997, the Company repaid
approximately $21 million of the New Facility (see below). As a result,
principal repayments due on the Senior Term Loan were restructured. Principal
payments due through September 30, 1997 were eliminated and quarterly principal
payments due on December 31, 1998 and thereafter were significantly reduced.
Of the $10 million available under the Company's revolving credit facility, $2.6
million was outstanding at December 31, 1997. From time to time, because of
inventory requirements, the Company may utilize a portion of the revolving
credit line. Borrowings under the New Facility currently bear interest at
rates equal to, at the Company's option, either (i) 0.25% under the bank's
base rate, or (ii) 2.00% over the Eurodollar rate.
The Company's $8.5 million principal amount of 12.5% Subordinated Debentures
mature on April 14, 2004 and require principal payments of $1,943,000 on
October 14, 2000, and of $2,307,000, $2,125,000, and $2,125,000, respectively
on April 13 of 2002, 2003 and 2004.
Public Offering Completed on December 8, 1997
On December 8, 1997, the Company completed a public offering of 2,500,000
shares of its common stock at a public offering price of $9 per share.
Proceeds to the Company, net of expenses of the offering, amounted to
approximately $21 million, which was utilized to pay down the New Facility with
the bank discussed above. This infusion of additional equity into the Company
significantly reduced the Company's debt level and substantially improved the
Company's debt to equity ratio.
Working Capital and Debt Service Requirements
Working Capital at December 31, 1997 amounted to approximately $11.8 million,
and the Company's working capital ratio was approximately 1.7 to 1.
<PAGE>
The Company's products are purchased from independent co-packers and the
Company does not intend to invest in plant or equipment relating to the
manufacture of its products. Consequently, no significant capital
expenditures are currently contemplated.
Principal payments due on the Company's debt for the twelve-month period
ending December 31, 1998 are approximately $3.1 million. The Company believes
that cash provided by operations will be sufficient for the foreseeable future
to finance its operations, fund debt service requirements and fund capital
expenditures.
Seasonality
Sales of food products consumed in the home generally decline to some degree
during the summer vacation months. The Company believes that such seasonality
has a limited effect on operations.
Inflation
The Company does not believe that inflation had a significant impact on the
Company's results of operations for the periods presented.
<PAGE>
PART II - OTHER INFORMATION
Item 4. - Submission of Matters to a Vote of Security Holders
The Annual Meeting of Stockholders was held on December 9, 1997. The Company
submitted the following matters to a vote of security holders:
(i) To elect a Board of eight directors to serve until the next Annual
Meeting of Stockholders; and
(ii) To approve amendments of the Company's 1994 Long Term Incentive and
Stock Award Plan to (a) increase the number of shares issuable over
the term of the plan by 345,000 shares to 1,200,000 in the aggregate
and (b) place an upper limit of 150,000 shares on the number of shares
for which options or stock appreciation rights may be granted to any
participant under the plan during any calendar year; and
(iii) To ratify the appointment of Ernst & Young LLP as independent auditors
for the fiscal year ending June 30, 1998 (Ernst & Young LLP were the
independent auditors for the fiscal year ended June 30, 1997).
The stockholders elected the persons named below, the Company's nominees for
directors, as directors of the Company, casting approximately 8,294,000 votes
in favor of each nominee and withholding approximately 149,000 votes for each
nominee:
Andrew R. Heyer
Irwin D. Simon
Beth L. Bronner
Barry Gordon
Steven S. Schwartzreich
William P. Carmichael
William J. Fox
Jack Futterman
The stockholders approved the amendments to the Company's 1994 Long Term
Incentive and Stock Award Plan casting approximately 5,866,000 votes in favor,
471,000 against and withholding or not voting 12,000.
The stockholders ratified the appointment of Ernst & Young LLP casting
approximately 8,427,000 votes in favor, 13,000 against and withholding 3,000.
Item 5. - Other Information
On October 28, 1997, the Company filed a Registration Statement on Form S-8
registering 1,755,000 shares of Common Stock, representing the aggregate number
of shares of Common Stock then reserved for issuance under the Company's 1993
Executive Stock Option Plan, 1994 Long Term Incentive and Stock Award Plan, and
1996 Directors Stock Option Plan.
Item 6. - Exhibits and Reports on Form 8-K
(a) Exhibits
Financial Data Schedule (Exhibit 27)
(b) Reports on Form 8-K
On October 28, 1997, the Company filed a report on Form 8-K
describing the acquisition of Westbrae (Item 2 - Acquisition or
Disposition of Assets). Filed therein were (i) the consolidated
financial statements of Vestro Natural Foods Inc. (the prior name of
Westbrae) ("Vestro") for each of the years in the three year period
ended December 31, 1996, the balance sheets of Vestro for each of the
years in the two year period ended December 31, 1996 and the related
report of independent accountants, (ii) the unaudited financial
statements of Westbrae for the nine months ended September 30, 1996
and September 30, 1997 and (iii) the unaudited pro forma condensed
combined balance sheet of the Company as of September 30, 1997 and
the unaudited pro forma condensed combined statements of operations
for the year ended June 30, 1997 and the three months ended
September 30, 1997.
The Company did not file any other reports on Form 8-K during the
three months ended December 31, 1997.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE HAIN FOOD GROUP, INC.
Date: February 13, 1998 /s/ Irwin D. Simon
Irwin D. Simon,
President and Chief
Executive Officer
Date: February 13, 1998 /s/ Jack Kaufman
Jack Kaufman,
Vice President-Finance and
Chief Financial Officer
<PAGE>
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